Ask the Readers: Should I Sell My Car?

The Friday “Ask the Readers” column generally follows a set format: I introduce the topic, share a reader e-mail, give my best advice, and then ask for your feedback. Today’s column is a little different. Sarah sent me a 1000-word question, and rather than write any sort of response, I’m just going to let her have the entire space. Everything that follows is from Sarah.

I have a question for other GRS readers. It’s a simple question: Should I sell my car? It actually seems to have a very simple answer: Yes.

I keep writing lists and outlining the reasons why I should sell my car (and why I shouldn’t), and the balance lies very clearly in favor of selling my car. And yet I’m having the hardest time selling my car.

Why? I’m a practical, logical, pragmatic person. Why is this so hard to do? Why is selling my car so difficult? Even with the facts laid out, staring me in the face, I’m having the hardest time selling my car.

Why I Bought a Car in the First Place
I used to live completely car-free. I lived in different cities and only walked, bused, or biked to get around — occasionally living the high life and taking a taxi when I felt like being luxurious. And then I moved to California.

I bought a car last year. I purchased a 2010 Toyota Matrix from a dealer, priced at $17,490, with a $1000 rebate for being a recent college grad. The Kelly Blue Book value of the car, at new, was $20,049. My purchase price was $16,490. With taxes, registration, and fees, I forked over $19,009. As a somewhat-savvy consumer, I secured a three-year financing plan with 0% interest.

I bought the car because I lived 40 miles from my job, commuting an hour each way (through San Francisco, across the Golden Gate Bridge), and there wasn’t sufficient public transportation to get me to and from my job.

I’ve now owned (and paid for) the car for 12 months, spending $6800 on car payments. I have $12,200 left to pay on the car over a two-year period.

The cost of the car has been unbelievable. In one year, these are the costs:

Car payments — $529 per month

20,000 miles total

25 mpg average

gas price is $3.15 in California

$2520 for gas, or

$210 per month in gasoline

Maintenance for one year (four tune-ups at $109 each) — $436 ($36 per month for maintenance)

Parking. I’m lucky to have free parking, mostly, unless I drive downtown — $50 per month is my average for parking

Every month, I spend about $1014 on driving and owning the car. $1014! This is roughly one third of my take-home income. What would I do with $1014 per month?!?

In addition, I have a substantial amount of debt from undergraduate and graduate student loans (in the realm of $80,000) that I’m currently working hard to pay off. The student loan payments are $679 per month. I struggle to make the car payment and the student loan payment each month.

Today: The Current Situation
In November, I moved back to San Francisco, because I couldn’t stand the long commute. Commuting through city traffic is tiring and psychologically draining; I quickly remembered why I dislike driving so much. In contrast, San Francisco is a hub of public transportation options — sometimes better or worse, depending on the neighborhood that you live in.

I now live eight miles from my job in Sausalito. The drive takes about 15-20 minutes, depending on traffic. Parking at my job is easy, but parking in San Francisco is a nightmare — it can take up to 40 minutes to find a parking spot. I have the option of purchasing a parking spot, but those cost upwards of $300 in a city like San Francisco, and I can’t stomach how much I’m already spending on the car alone.

I now have alterative means for getting to work. For example, I can bike to work a few days per week, depending on the day and the weather. There’s also a bus line that goes to and from my work on the hour, and takes about 30-40 minutes to get to work (it doubles my commute time, but I don’t have to worry about parking, driving, or concentrating on the road).

The (Easy) Conclusions
I worry that it’s a mistake to sell my car after owning it for one year. My parents tell me that I should wait it out for the next two years, buckle down, and just finish making the payments — because I need a car and can’t possibly live without one. People suggest that it’s foolish to buy a brand new car and sell a car within the first year of ownership.

However, I also think that sunk costs are sunk costs. What I’ve already spent on the car is gone; it’s what I spend in the future that’s still up for determination. I think it makes sense for me to sell my car.

Here are some reasons I think I should sell my car:

Living in a city — with ample public transportation, alternative car-sharing options, bicycle riding, and walking — makes having a car a luxury, not a necessity.

Getting rid of $12,200 of unpaid debt is a good thing.

There are additional costs to car ownership — insurance, gas, parking, maintenance — that will continue to add up over time. (To the tune of about $450 per month.)

The current value of my car ($14,000) is more than I owe on my payments ($12,200)

But wait! There’s more!

A car is a depreciating asset, and will not add any value over time. Struggling to make these payments does not help me reduce or eliminate debt in other areas of my life.

Public transportation to work costs $4 each way, or approximately $160 per month.

If I also choose to use a car-sharing program on the weekends, I would spend between $50 and $75 for a weekend use — but the cost would be elective, and not fixed.

If I don’t spend the money on the car, I can spend the money on other things that are more important.

It seems painfully clear, on paper, that I should sell my car. And yet I get in and drive it every single day — to teach swim lesson after work, to dinner parties, to events, on trips to Tahoe, on excursions. I am afraid of selling my car. Psychologically and emotionally, I’m attached to it. I also stubbornly don’t want to admit I made a mistake in buying the car in the first place.

So tell me, fellow GRS readers, what should I do? Can I afford to sell my car? Can I afford not to?

J.D.’s note: Though I don’t have room for my traditional long reply, I’ll just chime in to say I’m glad that Sarah mentioned sunk costs. That’s a very important thing to remember in making these sorts of decisions. (What you’ve spent already is irrelevant; it’s what you spend going forward that matters.) And I think her situation highlights why it’s often best to buy a cheap used car than a brand-new one. I think a $2,000 beater would be perfect for her.

some efficient cars might get 35-40 mpg “highway” driving i.e. constant 55 MPG, no stop and go. But the constant idling and stop and go of san francisco and golden gate traffic during rush hour, nothing would get over 30 except an electric or hybrid

GRS is such a great site because it realizes financial decisions are about more than money. Your question, Sarah, highlights the ambivalence we feel about making decisions just because they make sense financially.

So take the finances out of the equation. You’ve already done an excellent analysis of that. Ask yourself a few questions:

What kind of person am I? How do I see myself acting in the world? And does this person need this car? Or any car?

If you see yourself as environmentally aware, for instance, the car share program might be a better fit for you. And, although it’s not the cheapest option, spring for the frequent user plan and think of the shared car the way you see your current car.

If you see yourself as spontaneous, perhaps swapping the new car for a modest used one would be a good fit.

It doesn’t sound like you see yourself as a spend-thrifty gal–which is what financing a new car and keeping it on the road for lots of money probably sounds like to a lot of GRS readers. So what kind of person are you and what transportation will express that the best?

Much like J.D., I would suggest that you sell the car. It’s going to be such a freeing feeling for you! See how well you can do without it, and if you feel like you need some wheels, visit a used car dealership and purchase that beater.

If you get your costs down to around $200 like you suggest rather than $1,000, you’ll feel much better about your situation and can handle any emergency that may happen!

I love public transport and have never had my own car so perhaps I’m biased but for me, it’s pretty clear you should sell it.

You know from a financial point of view that it makes sense – even if you car-share every single weekend, costing $75 a time, your car-sharing and bus fares will still be half the cost of owning your car – that’s an extra $6000 a year in your pocket. You’re not even losing money if selling it now – and you could put that money in a savings account and buy a cheaper car in the future like JD mentions.

Before you moved, it wasn’t practical but now with the bus route, it is: sure, it doubles you commute time but that’s time you can spend reading or whatever (I listen to lectures and crochet when I’m feeling productive, and play Scrabble on my DS when I’m not ;) ) instead of staring at the road. And as you say, you can cycle too.

You’ve explained the reasons why you think you should sell – but what are the reasons for keeping it?

Hi, I’d also advocate for selling the car but leaving the psychological opt-out: permission to buy a cheap old car (like $2000 one JD suggested) if you feel after selling the current one that not owning a car is a mistake.

If you still lived 40 miles away from work then a car would be a necessity, Now that you live close enough to take the bus to work, then you should sell it off. Hopefully you can get enough for the car that it completely covers what you still owe on it.

It will save you the stress of having to find a place to park and the stress of having to deal with the traffic.

I think you cannot afford to keep it. Sell it, take any $$ left over from the sale and buy a used car if you like the freedom and convenience of being able to just get in a car and go when you want or need to.

And I do not think you made a mistake when you bought the car. You obviously thought about the pros and cons of purchasing and owning a car and made the decision that was best for your circumstances at that point in time. Don’t let anybody tell you otherwise (including yourself) :)

1. How often do you shift cities for jobs and is it in your hands to move to a public transport friendly city?

2. Can you keep the car if you only use it for car pooling or simply reserve it for the non-work related transport (to teach swim lesson after work, to dinner parties, to events, on trips to Tahoe, on excursions)?

Sell the car and save up to buy a good used car with cash. You can live without a car for a few months and save that $1,014/month to buy a reliable used car. Who knows, maybe you’ll get used to not having a car again. You can join zipcar.

I’m sure your housing cost went way up when you moved into the city. You’ll need to reduce other expenditures.

I have a 95 Escort wagon named Betty the Ford. I paid very little for her and since she only has 68,000 miles, she’s got an engine that will last for years. I’ve had to put about $2000 into her for some under body during the last two years, but my mechanic assures me that she’s in very good shape. Insurance on her is ridiculously low. If I had bought a new (or newer) car I would have been paying that yearly $1000 in 2 months instead of annually. A real bonus is that even though she’s a really attractive car considering her age, I don’t check her for scratches every time I go to the grocery store. After my long winded story, my advice is to lose the expensive vehicle and buy a cheap one or use the vehicles that you pay for as needed. You have better things to do with your money.

She should probably get rid of it, sounds like she’s already made up her mind. But I’d like to comment that there’s no way a 1-yr old car needs 4 tune-ups a year. Oil changes? yes. $100 tune-ups? No. Unless there’s something exorbitantly expensive about car maintenance in California, she should find a new mechanic for her next car.

I think it’s great the way you have carefully laid out all the reasons why keeping this car does not make sense for you right now. It seems clear that you would definitely be better off without the high overhead costs of owning this car. I say sell. I understand completely that hindsight is 20/20, but I’m sort of puzzled by your decision to purchase such an expensive car in the first place? If your take home pay really is in the $3000K per month range, a better idea might have been to finance a cheaper used car or a new car with a lower price tag, but over 5 years, so that your monthly payments would be much more manageable. Of course all of your other car costs would still be there, but you’d probably find them somewhat less of a pinch with a lower monthly payment. For example, my husband and I recently purchased a new hyundai elantra for $18,600 and a $6500 down payment including my $1500 trade. We received an interest rate in the 3% range and financed over 5 years, so we pay only $239 per month on the car loan. The reason I mention this is not to say that you made a mistake, but just as a reminder that whenever you make any purchase on credit, you should always consider how it will affect your discretionary income once you have to start paying the money back. Good luck with your decision!

I would sell the car and use the extra money you get (car value minus outstanding car debt) to make an extra down payment to your college debt. The money you don’t spend a month on car ($1000) you can partition in three sections: $300 on alternative transport (bike, bus, rental car, car sharing), $300 on extra pay off college debt, $300 for the emergency fund.
Just my two cents. I was able to pay off my college debt very quickly after I left university and that has given me much (financial) freedom.

You didn’t make a mistake in purchasing the car. You had to have it due to commuting.

Circumstances changed and now you are throwing good money after bad.

Take the leap and sell the car! Make a promise to yourself that you will try it for a set period of time (one month, three months, whatever). Make a note of all the times you REALLY wish you had a car… and not in an “Oh, it would be nice” kind of way. At the end of your time frame, go over your notes. If you need a car, go get another used one – it doesn’t even have to be a beater. Just one that will keep your financial boat from sinking any further than it’s doing right now.

Why not refinance and get a lower monthly payment until you find a buyer? My credit union offers 2.99% on 4 or 5 year pre-owned vehicle loan. Refinancing would reduce your monthly car payment in half.

I would suggest listing it for sale ASAP at a price that is more or equal to what you owe. Just be patient, it may take two or three months of driving it around with a For Sale sign or listing it on Craigslist or Ebay.

Please, ignore this advice if you are in a very busy area or don’t feel confident about the safety!:

I like the idea of a scooter for those dinners out and swim lessons, and a zip car for your Tahoe trips. The scooter won’t be perfect – i.e. if it is raining you may still ask for a ride or go with public transportation – but that will help bring you closer to a public-transit only mode.

A used car is a good idea too, but I have a feeling every time you have a repair >$200 you’re going to thing “damn, I should have kept that lovely new car”

One more option: Anyone nearby or in your building that you could create a car-sharing agreement with? (i.e. you share their car) I feel like SF is one of those towns where people would be open to such an arrangement.

It really sounds like you enjoy owning a car. There’s nothing wrong with that. You just don’t enjoy the high cost of this particular car. Sell the car, take any proceeds you make from it and perhaps set it aside for a while to see how things work out by not having a car. If after a few months you believe you would like to still have a car, just use the money that you made from the sale and buy one outright.

I, too, bought a car specifically for a commuting job – then found a better job that didn’t require a commute. (At least while I lived in my old apartment.) It’s not a mistake if there was a clear rationale for the purchase, and you couldn’t foresee moving so soon after buying the car. Don’t feel guilty about using the money you earned for a valid reason.

Anyhow, if the emotional/psychological part of selling back your car is getting to you, I’d suggest that you take a week or two to “test-drive” your new transportation: feet, bike, public transit, etc. Keep track of all the expenses related to it, and keep track of the adjustments you’ll have to make in terms of time/scheduling. Also keep track of where your new transit takes you, in terms of closest groceries, shopping, major transit (Greyhound, e.g.). During this period, you’ll have access to your car – but don’t use it.

Give this phase a good run. Given others’ comments, I think you’ll find yourself able to manage the transition. Realizing you can make something work can be hard after you’ve established a habit (like driving). You just need to allow yourself the time to establish new habits.

I’ve lived in four different states, traveled all over the country, go out fairly regularly, and have never owned a car. I take the bus or train everywhere that I can’t walk to. I carpool with friends who have cars are are going the same direction, offering them a bit of gas money if needed.
In some areas, you need a car to get around. But if you are living in SF (which has some of the greatest public transit I’ve ever used), there is no need for one. Its a commodity, a convenience. Whether it be for financial reasons, environmental reasons, or just simplifying your life – you’re likely to be happier without the car.

Ah, Liz beat me to it! I was going to suggest a two week trial period or a month.

I used to commute 40 minutes each way, and you’d be surprised what a big difference that is at the end of the day. When I changed jobs and the commute was gone, I had more time and energy for exercise, more time to plan and prepare healthy and frugal meals and more time to just unwind. However, a lot of people I know who take public transit love the opportunity to read or play on their smart phones as a way to unwind. It’s really up to you how you take to the lifestyle, but it can be hard to predict until you actually try it.

Also, if you do keep this car or get another one, I’d look into another place to get maintenance done. I can’t understand why a new Matrix would need four tune ups in a year. I don’t think my old corolla has had that many in total!

1. Your car should not have needed four “tune-ups” in its first year. Nowadays, a “tune-up” (new spark plugs) might be after 100k miles. You got taken for a ride there. Live and learn. Read the service schedule that came with the manual, and follow it. An oil change every 8-10k miles or so is likely all that’s prescribed, and this will run about $30.

2. Your accounting is a bit off. Specifically, the $529 monthly car payment is based on a three-year amortization schedule. But the car will last much longer than three years. That figure is relevant in terms of analyzing monthly cash flow for the present time, but your car isn’t “costing you” quite that much. Otherwise, once it’s fully paid-for, based on this accounting process (and after you’ve become a bit more maintenance-savvy) the car would become the clear winner over public transportation.

Additionally, now that you’re living much closer to your job (that is what you said, right?), it’s not accurate to compare your monthly fuel costs from your previous 40-mile trek.

I like Nicole’s suggestion of parking the car for a couple of weeks to “test drive” the no-car scenario. :)

Financial decisions on elective choices really have to be considered in the context of your overall finances and financial goals – none of which you have provided.

Are you short of money because of the car? What would you do with the saved money if you sold your car? Are there goals you can’t achieve because of the car?

Two more points:

1) Buying a beater is a good way to get rid of debt, but it won’t lower your monthly costs outside of the car payment.

2) Your car payment is quite high – This is partly due to your financing choice. Paying off $19k in three years is admirable, but it results in higher monthly payments. You have to consider that there are only two more years of these payments. If you keep the car, another 6 years – you will have 4 years of no payments.

Well, I don’t think you made a mistake in buying it in the first place. The question is now how much value do you place in it. Life is full of “sunk” costs, like food, shelter, kids, education, clothing, etc. It’s the value you are personnally receiving for the money that’s important.

So as others have mentioned I’d recommend taking a few weeks or even a month getting around without the car. Park it somewhere safe and away from you if possible and see how you manage. Like most things of convienance we get used to them and they become a need. To see if it’s really a need do without for a while. That will also help you determine it’s value to you and if it’s worth spending the money there or elsewhere.

Before you decide, you need to test yourself. Spend at least one week getting to work without using the car. Make notes every day what you did, note the time spent on alternative transport, etc. Then spend a week using the car again making the same notes of time spent & other costs. If after the one week test you still feel you should sell the car but you have doubts, commit. Commit and execute a full month without using the car at all, for anything.

After one month without it check again how you feel about the car. Sit down with your bills and detail where you would be financially after selling the car. Then list any doubts you have about whether to sell the car. What will alternatives cost? How many trips do you make during the week that are difficult with public transportation? Test out how much a taxi would cost for non-work travel and whether it would be convenient (sometimes they take too long to arrive when summoned by phone). Consider the cost of a rental vehicle for trips out of town.

By comparing the alternatives your decision will be clearer. Also consider how you would be set financially after two more years of paying, and how long you feel the vehicle would last. I bought a 10 year old used vehicle for $10k, and have had it for nearly 10 years now. So reasonably your vehicle should last a minimum of 10 years without major work. With that perspective in mind will it be worth it to pay it off? In just two years you would start paying more on the student loans.

Is there anything you can do to bring in extra money? You might feel differently if you had a few thousand in emergency cash. Or if you were paying an extra $100 a month on your student loans.

What is you car worth now if you sold it vs how much you owe on it? If you can’t pay off the loan with what you would make from selling the car you are surely better off keeping it for another year.

From my perspective you are being influenced by some internal buyer’s remorse and that is what is making the decision such a problem. If you are feeling you made a bad deal and you want out of it (subconsciously) you will feel bad every time you make a car payment. You can reduce some of your costs by using public transportation to work on days when you don’t really need the car, reducing your monthly gas costs. You are certainly in a good position right now to test out alternatives before you make a decision.

Keep good records during your test runs but don’t agonize over them. When you are ready to summarize the results write down your gut feelings about it BEFORE running the numbers, then compare. Sometimes our emotions influence our thoughts more than we realize. Just try to clarify everything and the decision will make itself.

I am always frustrated by arguments that you “need” a car. If you didn’t have a car, would you be unable to function in society? The answer is certainly a resounding “no”, especially in the Bay Area (where I used to live). So the only reason to keep the car would be if you *want* it, and it sounds like you don’t.

There are many alternatives, and I think you will enjoy the freedom from payments, worry, and the hassle of parking.

Why would she refinance at 2.99% when she clearly said her current financing is at 0%? Why would you advise her to pay interest when she’s currently not paying any?

@Sarah: Sell the car and take the bus. Lots of people get around SF just fine on the transit system, you’ll become comfortable with it in no time. You’ve got way too much student loan debt to be spending 1/3 of your income on a car.

Great, thoughtful post. I agree with others that when you lived further away and didn’t have public trasportation as an option, car ownership was vital. Now having moved with public transportation, it’s obvious that the new car is a burdon. I’d throw an experiment into the mix of options: before selling the current car, go carless for one week-is it do-able for you? reflect on the carless experiment? does public transportation meet your needs? Next, sell the car, pay off the loan and breathe. Either put in the $2000 over the car loan into a better fuel efficient beater car OR deposit the cash for emergencies.

Sarah, I disagree on buying a beater. That only saves you the car payment each month and maybe some on insurance. You would certainly have higher repair costs. The “$2000 beater” advice I hear all the time is tough to take unless you are a weekend mechanic or know a good one. You can often end up with more costs with $2000 cars and you still don’t have reliable transportation. Nothing like surprise $1000 repairs plus being nervous about taking the car to Tahoe because you are afraid it will break down.

Park your car at your parent’s for a month. Call the insurance co and tell them it is parked and will not be driven. See how you do. Your list of pros and cons can be on your fridge. It will also give you time to look for the zip car spaces and get used to public transportation.
IF you sell (which I am betting you will) DO NOT buy a beater. A huge part of your problem is parking. I know- BTDT in a big city. Live without a car. You can do it if I could for two years with two little children.

I don’t know whether you should sell your car either (although, I loved NOT having a car when I lived in D.C.!), but I will say that you might be surprised what you can find to do on a 40 minute commute. I live in a little town with a university that has a bus system and I could drive to campus in 5 minutes. My bus route takes 30. However, I *like* the bus because I get reading/knitting done that I cannot justify the time for otherwise.

I also like the idea of getting a good used car. When I was a sophomore I bought a used Kia Sportage (terrible mileage, but that’s beside the point) under original factory warranty for $7000 cash. It’s still going strong. It stays parked unless I need to go out of the college town, or somewhere not within bussing or biking or walk distance, and it works well for me. It would have been the same thing if I had taken the car to D.C.

Because you have other debt around $80K, it makes sense to sell it. I am of course puzzled how your car lost 43% of its value in 1 year. That seems a bit high to me, ut any case get as much as you can for it.

Before taking any actions, I have to ask: What are the chances that you’ll be moving again, or changing jobs?

If there is more than a small chance that either of these events will happen, I’d hang onto the car a while longer. You have already expended the sunk costs, so you don’t want to find out in a year that you need to purchase another car and invest in the sunk costs again.

If there is a chance of either, you might seek out a place outside the city where you could safely garage your car for a while. With family, or a close friend maybe?

JD – this is totally off topic, but can i put in a vote for a commenting feature where we can “like” each-other’s comments, I think it would be great esp. for “ask the readers” posts. – for example, I’d like to agree with Nicole’s comment without having to make a second comment. Sorry for the tangent, pls go back to enjoying your vacation!

I was also in a similar situation 2 years ago. I missed my car badly at first but after seeing my savings pile up, I didn’t miss it as much anymore. Now it would be harder to try to get me to BUY a car.

Who the hell convinced you that you need 4 tune-ups a year? Modern cars are designed to go 100,000 miles without a tune-up. All you need is an oil change, and that only about every 7500 miles – anyone who says less is trying to sell you oil changes, unless you’re driving in extreme conditions like through sandstorms.

I have a 14 year old car with 136K on it and I haven’t paid $1000 in maintenance total on it since day one, excluding new tires.

$20 for an oil change every 7500 miles. Anything else goes wrong, it’s a new car, get the dealer to fix it for free.

I would recommend against selling the car. If you can tough it out for 2 more years you will own the car outright and you can probably get at least another 7 years out of that car. Think about now nice 7 years without a car payment would be.

If you really want to make a fact based decision though you should consider the costs of both alternatives. Public transportation is nice but it isn’t free (at least not in the greater Philadelphia area). So you should compare the cost (time and money) of both situations. Additionally, I agree with the other suggestion to “try out” the lifestyle of living without a car. But I would suggest at least 1 month (and no cheating).

The worst option I heard was buying a “beater” car. I’ve been there. They are unreliable and frequently need work. If you are a mechanic it can make more sense but otherwise I would advise against it. Especially a $2,000 beater. Remember, on your current path, you are 2 years away from owning a car outright that will last you for 7 years.

First, you neglect sunk costs: so far so good. Next, you take old costs, which clearly are no longer applicable, and apply them to your new situation. Then, you neglect to address other uses – how do you get to the swim lessons and the dinner parties? You haven’t included bus, taxi, or car expenses for that travel. The Zip car needs fuel to get to and from Tahoe – not included.

And, worst of all, you are conducting this analysis AFTER having moved to SF. You traded a 40 minute commute for a 20 minute commute plus 40 minute parking search and higher living costs.

Your bad decisions so far include buying a new car and moving without a full analysis. The $1000 rebate was designed to fool grads into thinking they can afford a new car – which you can’t. Then you bought into the idea that living in “insert your favorite Urban center here” is cheaper than the suburbs and commuting without doing the analysis.

In the future, you need to analyze ALL of the effects of major life decisions BEFORE you commit to the changes.

I faced the same conundrum but without the debt load of student loans.

When I first purchased it I soon realized I barely drove my car because I commuted by bus (no parking costs!) and could do most of my errands by bike/foot. I didn’t realize that, when I first moved to my new city, I probably didn’t need a car. (It is now 6-yrs old with about 40K miles now)

It sounds like you do use your car for recreational purposes on a nearly daily basis…so I would think twice about getting rid of it.

If you do not drive your car to work and will be putting less than 15K miles annually on your car, check to see if your insurance will decrease – it should.

I would crunch the numbers based on your new living situation and look at it from a current cashflow perspective. If you use public transportation to get to work, then by your numbers, you save $50/month right there. Plus a discount on insurance that you should get for putting a lot fewer miles on your car per year.

Sunk costs are sunk costs and while the car is a depreciating asset, you have paid into it. If you’re one of those people who will keep a car for 15-years then maybe biting the bullet will be worth it in the end for those days when you just want to leave the city or be able to move.

FWIW, I paid off my car (with much internal grumbling). My life has changed a lot since I started grumbling 1-year into 5-years of car payments. My life has changed a lot in just the past 18-mos. While still I do not drive my car daily, I live in a new town where I really do need a car to go to the grocery store, I’ve taken several cross-country road trips and jump in my car on the weekends to go to the beach or go hiking. So yeah, I’m glad I bit the bullet and paid it off. Because in many parts of the country you do need a car. And you always need a car to get to those hiking spots that are quiet and relatively car-free. The irony abounds.

People are always going to question you when you go outside the norm. The norm in our country is to have a car….so if you go against it (and make people for at least a second have to question themselves or their way of living) they will quickly try to bring you back to the fray. The same thing occurred after college when I quit smoking (all my buddies were smokers) or when my wife and I got rid of cable for six months. Although I think you may be able to price around and find cheaper insurance, it doesn’t seem the car brings you any value or make you happy and instead is more of a burden. I think we all have enough worries, why spend 1/3 of our takehome pay for an additional one. Last year I was able to walk to work every day but I knew I only had a one year gig. I felt so much healhier, lost weight, etc. Now I communte 30 minutes each way (which isn’t too bad) but I can’t stand it. Best of luck cutting the chord on the car!

I don’t think those were 4 tune-ups. I believe she means four scheduled maintenance visits (probably at the dealership) as part of the outlined maintenance program. She’s just using the term “tune-up”. $109.00 is a bit excessive, however.

As to “sunk costs,” I don’t believe they should be dismissed so lightly. If she has a change of heart a year after selling the car and decides whe needs one due to life’s changing circumstances, she’ll sink those costs again.

I’m on the fence on this one.

She might keep the car at a relative’s house where she leaves it parked & protected. Because it has a lienholder, she’ll have to keep the insurance intact, but find cheaper insurance. She can use public transport while paying off the car @ 0% interest. She still saves money (fuel, insurance, maintenance, parking, etc) and in the end has a paid for (relatively new) car at her disposal.

At the time, buying a car was the best thing to do. Right now, you need to sell it. You have better options and later on down the track you can always buy another car.

I didn’t need a car where I was living in a metro city close to everything I ever needed. Then, I moved to my home-town where the bus runs once an hour. I needed a car to get to and from work. It wasn’t fair depending on my mother. Sure my car costs me a pretty penny each year for maintenance but she’s darling and absolutely perfect for my situation.

In sum, sell the car and take advantage of your public transport. Think of all the reading or video gaming you could get in!

Perhaps in other areas of the country this doesn’t hold true, but in South Dakota $2000 can buy quite a decent used car. Five years ago, we bought a 1986 Ford Taurus. Some people thought we were nuts, but it only had 50,000 miles on it. We paid for it outright with cash ($2000). We pay about $40 a month for insurance (liability only) and that is our only ongoing expense. So far we have not had to pay for ANY repairs. My husband changes the oil himself. So with the cost of the vehicle plus insurance, we have paid about $1000 per year to drive this car. While we may have just been lucky with this one, this is the third time since our marriage that we have done this with a car. After we’ve had it for about five or six years, and things start to go wrong, we sell it an get a new one. (A new old one). If you’re willing to look around a bit for the right vehicle (and not expect to get anything fancy) you can get a reliable car that will last years.

I was in a similar situation (bought a car when I was living in Phoenix, moved to Washington, D.C. where parking was a nightmare and public transportation is great). I sold the car and haven’t regretted it for a minute. If I’m coming back somewhere late at night or carrying a heavy load of groceries, I don’t feel guilty about taking a cab because I know I’m still spending so much less than I did as a car owner, and as an added bonus, I don’t have to deal with the driving or parking.

In the end, I’ve so much adjusted to not having a car, I haven’t even gotten around to signing up for ZipCar. It’s amazing how quick it becomes the norm.

Sell the car. I used to live in Houston where I could get everywhere on the bus. I owned a car. But I took the bus. The longer commute allowed me to relax and read.

If you find you absolutely need a car on some occasion, rent one. A rental car will always be available when you need it, but someone else pays to have it sit there, and your total monthly costs would still be lower.

Or there are cabs for the occasional times when the bus or the bike won’t do. Still cheaper than owning.

I think you know that selling the car is the best on-paper financial move. Sell the car for $14k, pay off your $12k. Put the $2k and the extra $600 or so (car payment + insurance) away for a few months. If you decide that you really miss the freedom and benefits of a car, go buy a certified used car (often with warranty) for $4-5k, cash.

But, if you just can’t bring yourself to do it, why not put your car into the car share program and at least make some money off it on the weekends?

First of all, whoever told you you needed a tune-up once once a quarter was probably a mechanic that wanted your money. A tune-up is recommended annually. An oil change is recommended for modern cars every 5000 miles, which for you would be once per quarter. But an oil change costs $25 or less. (If your handy, you can do it yourself. The first time when you buy the items you need it will cost $25-30, but then it will cost about $15 forever after)

Second, does the Golden Gate have an electronic toll program? Usually, you can save on tolls by signing up for one. The EXpress Toll on E470 in Denver is 10% off the normal toll.

Definitely shop around for cheaper insurance. I’ve never heard of AAA being particularly price competitive. Check Progressive or Esurance.

If parking is free at work, but it costs to park downtown, is it possible to leave the car at work and take public transportation downtown?

Finally, I would suggest looking into carpool options. If you can find just one person to carpool, that cuts your gas & tolls in half. If you can get 4 people, then those are only 25%.

By combining all of these, it should be possible to cut $200-300 per month off your costs.

When reading this, I really question why you had purchased a new car in the first place, when it seems as if the option to move back into the city was always an option and why something in the ~5k price range wouldn’t have worked.

I think your idea is sound to sell the car. Simply put you don’t need it, the overhead, headache and hassle from it. It’s a liability and it’s one that is going to depreciate as it get’s older and is worn from being parked on the street for long periods of time. Car sharing or even car rentals are a good option for city living so you can still ‘get out’. Clean it up really nice, take some good pics of it and put it on craigslist for a cost below current value, but more than what you have to pay your loan for.

For those who have a problem with purchasing lower priced cars for commuting use, don’t knock it until you try it. The key is getting the right type of car for commuting that has been well taken care of and is suitable for commuting. My winter Daily driver is from 1989 and has 183k loving miles on her.

I think people are quick to say sell the car. I paid cash for my first new car 10 years ago, and it’s been so nice compared to the beaters that I drove until that point. Just the confidence that it is unlikely to break down is worth so much.

If you’ve got 0% financing, then you are paying cash for your car as well. Your $529/month is an expense, but it isn’t a “forever” expense like a telephone or cable subscription. When it’s paid off, you’ll have an asset. Technically, it’s a depreciating asset, but to you it is an asset. That car is going to get you around, and probably with minimal maintenance for a good long time.

25mpg average isn’t too surprising to me. My Ford Focus gets 40mpg on the highway, but with a lot of town driving is regularly in the 20s. You already know (from previous commenters) that you are getting rooked for the service, so you should change that.

I live in a rural area, so car necessity is different for me. But there are positives for you too. Your car payment isn’t going to go up. Over time, this car is going to get cheaper (and then eventually more expensive when it has become a beater, but that should be a long time from now).

If you are driving your car less, presumably you are already saving perhaps $200 a month in gas and tolls?

It’s a tough call when you are “on the edge.” If you get in a bind and have to sell the car quick to make ends meet you could take a beating. But you could also end up sticking it out (assuming no emergencies) and have it paid off in a couple of years and at that point it will become much cheaper.

If you sold the car, could you honestly say that you’d turn $600/month around into savings or other debt reduction?

Disclaimer: I’ve never not had a car since turning 16, and I dislike public transportation.

I vote for keeping the car. As others pointed out, your expense analysis is changing because you have no tolls and reduced gas expenses since your commute is shorter. There are a lot of great suggestions about shopping around for insurance, making sure you’re following the maintenance schedule recommended by the manufacturer and not some mechanic’s ‘recommendations’ etc.

You are deriving value from having a car: “And yet I get in and drive it every single day â€” to teach swim lesson after work, to dinner parties, to events, on trips to Tahoe, on excursions.” Stay the course. You will have a paid-off car in two more years, and then no car payments (and still minimal maintenance) for 8-12 more years before that car becomes comparable to the $2000 beater some are recommending. The car payment can then be applied towards your student loans.

Also, the tougher it is to get to SF, the tougher it is to dine at the fancy, overpriced restaurants in SF. Having a car makes it too easy to get out and blow money on Stuff. I moved from the middle of a big city to a distant, under-developed suburb and have saved a lot of money getting away from easy temptations.

I think the biggest mistake this writer made is buying a NEW car with a loan instead of saving money and buying a USED car and paying it in cash. Otherwise, the writer never owns her car. The bank owns it. Get it straight!

There is nothing financially savvy about this train of thought:
1. I need a car, but I don’t have money
2. I’ll borrow money to buy a car
3. A car = investment (it is not an asset it is a liability due to its immediate depreciation)
4. But I can’t afford the cost of ownership of a car

I’d say the logical answer is to sell the car. How long are you going to stay in the San Fran area? Have you tried the public transit to make sure you aren’t going to be frustrated every day (only because you aren’t on your own schedule anymore, in my experience)? Can you sign up for Zip Car in your area should you need a car? Is Zip Car affordable with your budget (I’m assuming yes, but I’ve never looked at the fees.)?

I’d say take a week (or two or a month, whatever) and test out not driving the car at all. See if you will be comfortable. If so, sell the car. The test will make it easier, since you, right now, are stuck in a rut of driving everywhere. It’s hard to break a habit.

And, unless you’re using the dealership to make sure you don’t void your warranty, find a new mechanic..$109 each for 4 “tune-ups” seems very high to me. I think I was paying $50 at the dealership for an oil change and tire rotation (high, yes, but I didn’t want to take any chances with my warranty…overly-cautious, obviously!).

Maybe it was a mistake in buying a new car with payments right out of school, but what’s done is done.
Strangely enough, being essentially a non-driver, I don’t know if this is a slam dunk to sell the car NOW. As others have pointed out, the expenses with her car are changing in the short term, and in 2 years she will have a paid off car. I doubt that she will be able to sell it for more than her car note. We did something similar in buying a used but reliable hence expensive van, making payments for 2 years. We now don’t have a car payment and hope to use it as long as possible. For our family of 4 it doesn’t mean that we drive everywhere. We often walk our kids to school, I take a bus to work or walk from work, and my husband will often bike to work. But admit it, it can be a real convenience to have your own car. I also don’t recommend the 2K beaters seriously there is a reason they are 2K. So if you are able to keep up with your bills still having the car I would either keep the car while keeping expenses for it low (change insurance, do the minimum recommended maintenance, take public transportation to work at least some of the time), or b) sell the car. But if you really really miss having a car buy a car outright but one that is reliable that you feel comfortable driving.

I think many respondents have been a little too eager and quick to jump on the “sell the car, take the bus” choice because it’s the trendy-sounding, chic, urbane option. But that doesn’t make it the best choice for Sarah.

——

“Forget about the-completely-wrong-saying: â€œcanâ€™t possibly live without oneâ€œ, referring to live without a car.

It is aways possible. Billions of people do, why wouldnâ€™t you?”

Because it wouldn’t fit my lifestyle,and I don’t want to. Billions of people live without clean drinking water, that doesn’t make it a wise choice.

—–

There’s also a lot of conventional wisdom on here that might not be applicable, either.

“Don’t borrow money to buy a car!” “Buy a used car.” “Buy a beater.”

She borrowed money at 0%. She bought a reasonably priced and highly practical (not showy), extremely reliable and sensible Toyota. Toyotas (and Hondas) presently are experiencing nearly linear depreciation rates. That means that there is practically no benefit whatsoever to buying these cars used. New, they are great cars; used, they are highly over-valued.

Sarah, I did the almost the same thing– purchased a car, realized I hated the car and it was a huge mistake, and have since decided to sell the car.

You have to just chalk this up to learning! Don’t make the same mistake again, don’t worry about what your family will say (they are not paying, you ARE), and move forward. It’s uncomfortable, no doubt, to admit to a mistake– but it’s worse to say stuck because of pride.

I’m with the few posters who suggested having a car-free “dry run.” Park it for a month and do not use it. For anything. No matter how much it would make life easier. Find a way to live without it. This should be long enough that you encounter basically all of your random errands that deviate from your routine and you can figure out how to deal with them without a car. At the end of the month, figure out whether the convenience of having the car offsets the rather astronomical costs.

I disagree with those who are in the “buy a $2000 beater” camp, because simply having a car is expensive regardless of whether or not it is paid off, especially in the city. You will still have to park (which is extremely not-free outside of the suburbs) and insure it and it will still need gas and maintenance/repairs.

The freedom that a car provides is absolutely worth considering. We were car-free for five years, but in the last year I felt trapped in my community or the corridor of the commuter lines. I ‘needed’ to get out to camping weekends, trips to the hardware store, etc for my sanity. If Sarah uses the car to get to the things that psychologically sustain her, then having a car is worth it.
That said, when we decided to buy, the only way it made financial sense was to get an used $2000 not-quite-beater. Anything more expensive, and ZipCar or rentals would have been cheaper. Sarah might find that with all the transit/cap/car share/rental options in SF, that using cabs and renting occasionally will come out cheaper, and get rid of that parking problem.
Sell the Matrix, and spend just as much as you were per month on other transportation options, and see how you feel about it. If it seems to be a hassle, then buy a cheaper car and use it in ways that make you happy and count it as money well spent.

You said you live 8 miles from your work. Traveling by bike would allow you to make the trip to work in about 30 mins (assuming a 15 mph avg) which would be faster than the bus and just a little slower than the the car. Also with the bike, assuming the distance for normal groceries is even closer, you would be able to complete your normal errands. I also am told SF is a bike friendly city. Plus you get a free workout!

So my vote is to sell the car and get yourself a bicycle (you can even get one of those electric assist bikes to help up the hills).

What about selling the car and getting a scooter or moped? Then you could still get to dinner parties and swimming. You could buy the thing with cash, pay very little for insurance and gas and I don’t know about the parking, but I’m sure it would be cheaper (and easier to find spots?). Rent a car for a road trip like Tahoe. With all of the money you save in a year not having a car, (like $10,000) put some of it away and then go on a nice vacation or use some of it to go out to dinner and really experience San Francisco to its fullest. I imagine it wouldn’t be very fun to pay high rent living in a great city but having no money to enjoy the culture! Sounds like you have a good head on your shoulders! Do what you want to do : ) Good luck!

I feel for you. I also made the mistake of buying a car I couldn’t afford… then paying and paying and paying on it, staying longer in student loan debt because of it. I finally sold, and felt so FREE! And I always told myself I could rent a car for a weekend whenever I needed in order to quell my psychological desire to own a car. I haven’t had a car for four years now in the city (who’s transport is similar to San Fran) and haven’t rented a car once! I thought I’d do it more often.
If you bike, think of the health benefits!
Since San Fran has such on awesome public transport system, I’d go for it! You can pay off those student loans faster. I always read and do crosswords on the bus. I bring earplugs for when its too noisy to concentrate.
In response to your parents, unless they live in the city most people think it is impossible to live without a car. It’s not! At this stage in your life its a luxury.
Also in response to her tune up costs those are probably just oil changes/maintenance checks at her DEALERship, which is known for being more expensive but a lot of new car owners seem to like to go to the dealer.

sell the car. you don’t need it. you could either do as j.d. says and buy a “beater” if your ego can stand that OR you could rent a car for those occasions when you need one. If you rented a car once a month for a weekend at the end of a year it still wouldn’t come close to what you would spend on car ownership. Not only does this shiny new toy cost you money, but time spent in looking for parking AND in rationalizing and worrying about. get rid of it….it’s sapping your energy, trust me.

It is NEVER a good idea to buy an “old beater!” If you think the cost of maintaining a new car is high, you ain’t seen nothing untill you start shoveling cash into an old car. Besides the monthly repairs, which are inevitably very high, there is the massive inconvenience: As you are driving to the most important appointment of your life, the think will quit. Guaranteed. Oh, and of course there is the environment. (Republicans may skip here). Newer cars are more efficient than old ones. There are no exceptions. A car is freedom. Most cities in America are car towns. In KC, for example, a person literally cannot to there from here on a bus. Only two options: own a car or take a cab. If one has 400+ pounds of stuff to schlepp around as I do, the options become pretty narrow pretty quick. Nobody can REALLY afford a new car, except maybe folks in the Bill Gates category. Keep it and bite the bullet.

Four tune ups?? Did I read that right? You do not need a tune up every 3 months.

I agree with JD. If you cannot be without a car, buy one cheap for cash and insure liability only. Make sure you get oil changes religiously (every 3000 miles if you’re not driving it a lot because sitting oil gets sludgy) otherwise every 3000-5000 especially if you use synthetic oil (it’s more expensive but good to use in engines with a lot of mileage). You can get a lot of use out of a good used vehicle and it’s a heckuva lot cheaper than making dreaded car payments. You will need to put money in for repairs (timing chain, serpentine belt, water pump, spark plugs, and so on) so budget for it. I bought my 2002 Nissan new and it’s still going strong almost 10 years later. Still looks reasonably new.

Why not pretend you don’t have the car for a couple weeks to a month and see how it goes? (Obviously you can’t pretend away the payments, but it would give you a better sense of how hard it would be to live without it).

Sell the car! I lived in the Bay Area and was often in San Francisco. You don’t need a car much less something fancy, new, and freaking expensive as hell with crappy mileage. Psychologically you’re holding onto it? That’s some really expensive therapy lady. You can sell the car and afford to pay a therapist to get you over it! ;) OR: No shame, no blame. You did what you did when you did. It’s a mental sunk cost if you will. You’re going to want to kill yourself in another six months for not doing it earlier.

I would NOT sell the car. We have our car, which we’ve had for 15 years and it still works great and I love it. We don’t use it a ton so it lasts a LONG time. You are paying for a car in 2 more years which can be around for an additional 12 years, which the only additional costs are use-based (gas/mileage) and insurance. You have no idea where the next 12 years will take you and it seems short-sighted to me sell a car that can last so long when you can use it now for the weekends, etc. And it sounds like you really enjoy having it. I would reconsider whether you want to drive to work or take the bus. If gas and parking aren’t much cheaper, take the bus and save the miles. You’ll use those miles later in the car’s life. If you treat your car well, it will last and last and last

@SG from Germany
The reason 25 MPG sounds low to you is because you probably drive a diesel car. They get more MPG but pollute more. Most people in the USA don’t have diesel cars, so 25 is pretty good.

Keep it. Swallow the pill for the next two years and pay it off. Look what you said below, you are also physically attached to it. Forget the year behind you and look 10 years out. You should immediatetly be able to lower all of the cost on your list based on your location. Less gas, lower miles=less maintanence,lower insurance-shop around for low mileage plans, less tolls, and even parking. Calculate your costs after the car is paid off and go out 7 years (10 years after purchase) to see potential savings. There is no reason the car won’t last that long if not longer, especially with lower mileage. Plus its hard to anticipate future needs, you may find yourself definitely needing a car in say 2 years from now and will have to go through this again. The beater is not a good idea. I have seen way too may people buy a 2k car get 6 months to a year or less out of it and then pay a couple grand for numeroous small issues or 1 big isssue. I think if you do all the calculations going out 10 years (and the car will probably last longer) you will find that your situation will be cost neutral or not a big deal either way.
“It seems painfully clear, on paper, that I should sell my car. And yet I get in and drive it every single day â€” to teach swim lesson after work, to dinner parties, to events, on trips to Tahoe, on excursions. I am afraid of selling my car. Psychologically and emotionally, Iâ€™m attached to it. I also stubbornly donâ€™t want to admit I made a mistake in buying the car in the first place”

@Jane Diesel’s don’t pollute more, they pollute different. Diesel emissions are better for the environment than gasoline, worse on the human lungs due to the particulate size. All diesel’s should have a filter that get’s cleaned now and again I think.

As a fellow San Franciscan who went through the same dilemma as you I can honestly say looking back that selling my car was one of my best financial decisions. San Francisco is an ideal place to be car-less. With a great city transit system, ever expanding businesses like Zipcar and RelayRides I don’t feel like I’ve lost one ounce of freedom. The money I’ve saved is innumerable as is the stress from trying to find parking or finding tickets on my windshield because I was 1.7 inches into a barely discernible, highly faded red zone. I would encourage anyone moving to San Francisco to do the same. Go for it Sarah. I promise you won’t regret it.

Your old commute sounded atrocious! Your new 8-mile trip is even walkable and I understand SF is very bike-friendly, yes? A 20 minute drive for 8 miles sounds horrible too. Why keep a car for this torture?

The clunker sounds at first like a good idea, but still needs a $300 parking space. So, before you do that, you might wanna give ZIPCAR a try, no? You’re used to living without a car anyway and you don’t need to listen to the “oh but you must have a car” crowd. Zipcar is awesome.

I bet you that for under $300 a month (the cost of parking alone) you can pay for cabs, buses and the occasional zipcar, without having to worry about insurance, repairs, parking, street cleaning days, oil changes, etc.

Just the other day we had a bunch of people saying that if you didn’t have a TV people would think you’re weird. That’s the kind of mentality (following the herd) that keeps people broke.

If the car is too much *for you*, and you know it, and you live paycheck to paycheck because of it, by all means get rid of it and start improving your financial situation today. The “freedom” of the car is illusory if it gets you places but you don’t have any money to spend in those places. Decide what freedom means *for you*.

Oh, and if you can bike to work a few days a week, you can do it every day– with the proper clothing, you can bike in any weather. One month of car payments should get you some science-fiction class bike gear (and a really good bike maybe 2-4 car payments?). You’ll also get in great shape and enjoy the endorphin rush while avoiding the stress of traffic.

PS- To answer the people who say “keep the car, who knows where you’ll be in 12 years”, I think you’d be better off saving cash for the next 12 years and then IF and WHEN you need a car you buy a used one with cash rather than putting a debt noose around your neck. Read Dave Ramsey for more info on buying a car with cash.

Buying a $2000 “beater” would be a terrible financial move masquerading as frugality. Maintenance costs would likely be much higher than you are paying now, gas mileage would probably be less, and you cannot put a price on the safety factor, particularly on longer trips.
Buying a more recent used car in better shape would have been a better move than buying the Matrix to begin with, but selling the Matrix to buy a good used car would yield a negligible savings at best at this point. You would have to pay sales tax on your “new” used car; also, please bear in mind that just because Kelly Blue Book says your Matrix is worth $14000 is no guarantee that you would get that much for it.
Also, your life has changed a lot recently, and there is no guarantee that your circumstances won’t change again, and soon. Your easy commute may be short-lived, for any number of reasons.
Accept that you made a few bad choices, and keep the Matrix, unless you honestly think that you can live a car-free life with no regrets.

Sell the car! It seems your main concern is your parents/friends think you should have a car. Well, I had the same response from my acquaintances and family when I decided to go car-less almost two years ago. AND I live in Rochester, New York – which has worse weather and worse public transportation. These last two years have been great, I love not having to deal with the car (plus all the $ down the drain).

Take the plunge – you’ll be happier and your bank account will be fuller.

You could make one additional calculation: *suppose* you find out after 6 months that you really can’t live without that car: what would it costs you to buy another one?
Or better: would it cost you *more* than your current expenses?

Sell the car. Look at the money saved. You are very lucky, because you live in a part of the country that you don’t have to deal with snow. I have friends here in Iowa that commute every day even during a snow storm. Also, think of the health benefits! Follow your heart. You already know your decision. Your car is, as you stated, just a luxury!

She knows the car is a money drain. She knows she can live car-free. She said herself she’s afraid to admit it was a mistake.

It wasn’t a mistake. It seemed like a good idea at the time. Maybe it was. But it isn’t a good idea anymore. Owning a car while living in SF is actually a huge and expensive burden. Sarah, set yourself free.

I echo what Tom (#13) said, there’s no need for tuneups on a new car under one year old. Unless the new car is a 1950 Chevy (like my first car was, in 1963) or even a 1977 Chevy (a fine car, but can’t hold a candle to my later Camrys and current Accord). Advances in cars (electronic ignition, fuel injection, etc) have made them so reliable they’re almost appliances.

Me, I’d sell the car and NOT buy a beater. A beater couldn’t be relied on for the long trips she likes to make, it would have higher repair costs, and it would still have insurance costs. I’d use public transportation or a rental car for those out of state trips.

I commend the young lady, though, for having the ability to think through a problem and articulate it well. Rare virtues in any age group.

Sell the car. Makes sense financially, but then many things include psychology and emotions. Seems you hate the car (and sunk costs) but keep it out of what? Obligation? Punishment? Shoulda woulda coulda? All the other uses you could use it for, you can either rent a car or go with a friend (Tahoe). It seems to me that financially it drives you crazy, but the emotions/ symbol of freedom (from what?!?)/ parental advice keeps you from selling it. Not everybody likes driving. Taking the bus is a longer commute, but way less stressful…heck you could take up all kinds of hobbies to do on the bus on the way to work. Is there anything else you’d rather do with the money from the car? Any hobby or item you’ve wanted to do or try but finances are holding you back? Nothing wrong with using a small amount from the savings for this….just budget it in. Good luck!

I’m not in a similar situation, but my fiance and I only have one car right now and are getting married in May. As of next month, the wedding will be all saved up for, and that will free upwards of a grand a month. We figure that with the gift money from the wedding, we’d like to get another car. She uses her sisters at least twice a week now, and I’d love to let her use her own car that she got as a gift for graduating (I’m using it now). I can’t decide what type of car I’d like though. We live in an apartment, but I really like the cars that have a littler more room than something like our mazda can give us. I’ve had a camry before, and the size was pretty good, but I’m still leaning towards an XTerra sized car/suv. The issue is that I drive ~20 miles each way to work, all on back roads, no highway. The driving kills our mazda’s MPG, so I could even imagine an SUV. Blah!

I was in a similar situation (in SF no less) and chose not to sell the car. For the first 14 months I needed the car for commuting and put 20,000 miles on it. After that my job switched and I could walk or bike commute so I just parked the car during the week. (Move the car immediately after street cleaning goes by for the week for easy street parking.) Costs went way down driving only 1500-2000 miles/year – gas was minimal, insurance lower, maintenance next to nothing. Having a car in the bay area gives you more freedom and flexibility – especially important now with all the public transportation cuts going through. Now that I need the car for commuting again, I have a fully paid for low mileage car.

Don’t know if this has been said (at work and don’t have time to scan all the comments)..

…but the other thing to consider in this tradeoff of moving back into the city is the higher cost of rent, food, and other things that you ordinarily might not have had to deal with while living outside the city.

When I did a similar assessment about living in NYC versus outside the city…it virtually worked out to a wash when factoring in public transit…obviously that depends on the specifics though…my car payment is only $260 per month…at the end of the day, it just came down to personal preference.

I think you have made the right choice; sell the car now. The market for new good clean used cars is good; you’ll recover more than if you wait longer. I don’t think you can afford the full cost of the new car. Once you’re back without a car you’ll enjoy all the ‘extra’ cash that the car was swallowing. There are great weekend deals on rentals, chat a bit with the rental guys. All the comments on old used cars is good, just have it checked by a trustworthy mechanic before buying. Ok, it’s hard to sell, and it’s even harder to say to ourselves, ‘I made a mistake.’ But, once you’re finished with the car and enjoying some cash flow, you’ll feel much better. It’s a small error and you are learning from it. way to go.

I live in San Francisco, work in Berkeley, am carless, and love our Zipcar membership, so I am definitely on the “sell it” team! It will seem scary at first, but really, it’s quite liberating. And if you get sick of the Sausalito bus, you can always take the ferry. :)

I’m in a similar boat. Changing jobs, and I just got a Jetta TDI for the 40-42 MPG since my old commute was 80 miles, all highway in the country with little stress.

If you take care of the car, and you like it, it can last you 10-15 years. Probably longer if you’re not driving it often and taking care of it. I would also think you could drop the insurance and just pay a daily rate if you use it while you don’t need it. I would think that in 2-3 years the car with close to the same miles will price pretty close to what it is now. And you’ll have it if your situation changes. Just start it up ever 2-3 weeks, idle it for a few, and shut it off.

Also, doing oil yourself will cost you less than $30, probably closer to $15, and that’s all you really need to do for the most part until your car hits 30,000 or maybe even 60,000 miles.

Then again, renting a car for a weekend isn’t that much if you need it. I just like the options in case you take on a commute.

Of course, all of this is contingent on your bank letting you park the car somewhere and continue the payments without insurance. And providing you love the car. I love my Jetta, so I’m good with having it for 20 years, it fixes the noise issues I had with my Corolla. And the sound system and Leather were nice upgrades.

If your parents are close, they may even be willing to keep it in their garage for you and start it every month.

Even still, if I get the right price on my Jetta, I’d probably sell it, but I’m OK with having it paid off and putting a ton less miles on it.

My parents told me when I became a teenager “Go as long as you can without a job or a car, because once you get either one, it will be hard to live without it.” Lifestyle deflation is always painful, even when we know it is smart.

The feelings you have about this car remind me of when I gave up my iPhone in favor of a pay-as-you-go phone. I knew it was financially the right thing to do, and I knew that it was more in line with my values, and I knew that plenty of people don’t have iPhones. Even still, it took me several months before I had the guts to cut the cord (so to speak) to port my number and “ditch the tech”. I don’t regret it, but I do still miss it. I think that is to be expected with any lifestyle deflation.

Plus an occasional weekend car rental for out-of-town trips(I recently rented a car for a 3 day weekend for $110 including insurance– you can get some good deals if you look at the specials on the rental agency websites). I have a Zipcar membership but haven’t really found it to be terribly useful or worth it, although I know others like it. I also know many, many people who bike everywhere.

In short, even if you rented or took cabs more than I do, I can’t imagine ever spending more than $500/month on transportation if you sold your car. Sell the car, allow yourself $500/month for transportation (psychologically it might be easier to let go of the car if you’re “allowed” to rent a lot if you need to), and distribute the other $500 plus whatever you don’t use up of your transportation allowance among extra loan payments, savings, fun, etc.

I’m not going to give you my opinion on whether I think you should sell your car because you’ve heard plenty of well-reasoned opinions already. :-)

A couple of things popped out at me when reading your post, mainly related to the paragraph about other people telling you that you should keep the car.

So I’m wondering:

1. What would it mean if you went against your parents’ advice? Have you done this much in the past? How do you view them in terms of their knowledge/wisdom (e.g. do you think they are generally knowledgeable and rational or irrational, etc)?

2. When people say “you can’t possibly live without a car,” what they are really saying is “I can’t possibly live without a car.” That comment says more about the talker than you!

3. What does making a mistake mean to you? How do you view mistakes (e.g. as learning experiences, as failures, etc?)?

Good luck with your decision! You strike me as someone who weighs her decisions carefully, and I’m sure that whatever you choose will work out for you. :-)

I think you have gone a pretty good financial analysis on your car, but I think that you are overstating the cost of ownership a bit. You quote $1,015 a month, but that includes your car payment. You should be able to keep any car for at least ten years. So at this point you are prepaying for the last 7 years. Thus your cost of ownership is the total cost of the car a month is the $19,044 divided by 120 months. So your “payment” is really $158.70 giving you a monthly cost of $643.70. Still a lot of money, but it shows you will not save as much as you thought in the long run with the other options. In addition, I did not see property taxes in your calculations.

Sell the car! I mean you aren’t emotionally attached to it right? It’s just a car, not your childhood home or first condo! If you decide you want one in the future, you can purchase another. I agree that it is a sunk cost!

We live in Chicago and sold our car last March. It was the first time in all my years not having a car. I love it! I didn’t know if I would make it through this winter, but I have made it through thus far! Of course I don’t love commuting, but I do love reading the local Red Eye newspaper in the morn and a book or mag on the way home!

I am sure there is a car sharing service in San Fran like the Zipcar we use here for the occasional trip to a big box store! But overall, I feel like not having a car also helps me shop less! Sometimes it is good not to just be able to jump into your car to buy, buy, buy! You think more about a purchase!

From all the points you listed, I don’t think you will have much regret! Or, you could always deal with your regret on a beach in Hawaii with the $12,000 you’ve saved!!!

Absolutely sell it. You’ve done a great job laying out the reasons why it makes sense. Get rid of it, cut your losses and then, later consider JD’s advice to buy a beater. With a beater car, you can worry less about it parked out on the street and not have to deal with the payments, depreciation etc.

Most of the time you can use the bus/bike and just use the beater when you need to get out of the city, or for those nights you are out late etc.

As with any problem solving, one must be careful not to impose artificial constraints when looking for a solution. In this case, the solution is not necessarily sell or keep, but rather, should be about finding a cost justified alternative.

Though I believe the cost figures given are a bit inflated, it would still be over $700 per month to keep the Matrix. This makes keeping the car hard to justify. So the next step is to identify the alternatives.

1) Buy a ‘cash car’. J.D. already mentioned getting a $2000 beater. Where I live one would be hard pressed to find a reliable $2000 car, but for around $4000 the possibilities open up nicely for older cars in good condition. Car dealers often take in older cars on trade. Cars more than 5 years old cannot be financed through dealer financing programs, so dealers sell them cheaply just to get them off the lot without having to wholesale them (for even less). Because they cannot be financed by the dealer, you have to pay cash (or have your own financing), hence they are referred to as “cash cars”.

If the convenience and security of having 24/7 transportation availability is important to Sarah, and I suspect it is (this is the quiet nagging in her sub-conscience), then the cash car would appear to be a good solution.

2) Rent when needed. If you can plan ahead a little and have a budget type car rental business nearby, for around $25-$35 a day this could be a viable solution to attend parties, get out of town, and for trips.

3) Car share. Already mentioned by Sarah and might be an alternative to renting. I am not familiar with convenience, availability, or cost, but that should be factored against renting.

My husband and I also live in the Bay Area and were faced with the same decision. My car (which was fully paid off) died and it would cost more to fix it than it was worth. And it would have DRAINED our savings account. We got rid of it. As a result, we bike everywhere and are paying off a substantial amount of our combined student loans. Within a year, we hope to add $750 to our month budget, when two small student loans will be paid off. We use ZipCar and Enterprise Rentals to get around — we also bike, bum rides and use public transportation. Northern CA is the perfect climate to bike in — there’s no severe weather worth mentioning and so many other people have cars that getting around isn’t that hard, even through the public transportation leaves a lot to be desired.

Everyone thinks cars a necessity in CA. It’s just the culture. Screw the culture and do yourself a favor! It will be worth it! Student loans are nothing to toy with — pay it down asap.

Ok, the thing that doesn’t make any sense to me is the 4 tune-ups in one year. Um, you’re getting ripped off. It’s a Toyota. A tune up at 60k and 110k sounds better. Maybe she meant oil change. But she can do that herself. It’s SO easy to change your oil.

And why does one need a new car? You can get a cheap used Honda Civic (90’s model or so) which will be just as reliable and easy to maintain, insure and register. And if you don’t drive it often, you could keep that car for less than $1000/year. Registration would be less than $100. Maintenance would be few and far between. The mileage would be awesome, hitting close to 40mpg.

Sarah, your piece really rings true with me. I struggled with the opposite of this decision for awhile last year – whether or not to buy a car. I made a lot of spreadsheets and eventually just threw the spreadsheets out and went with my gut feeling, which was that I wanted and needed the car.

There’s still a voice in the back of my head trying to say that it’s more expensive than not having a car, so I promised myself that for the first year I would keep a spreadsheet tracking:
– the fixed monthly/daily costs (car cost assuming keeping it for 5 years, insurance, parking at my apartment building, maintenance)
– cost of each tank of fuel and my fuel consumption rate
– how many hours I would have spent on zipcars had I not purchased the car
– how much I would have spent on taxis, public transportation, and long distance buses

I then calculate the average ownership versus renting/busing cost with the above numbers per day, 7 days, and month. So far, ownership is winning out, but we’ll see after the end of the year. I don’t drive every day, but I’ve reached a nirvana at this point with the added independence and flexibility that the car provides me and I know I will hold onto the car for many years to come. My transportation costs average about $450/month.

I don’t think that you can make this as a straight financial decision. I like J.D.’s suggestion that a $2000 old beater might be right for you. What if you sell the car now and in 3 years, you move somewhere else and realize that you really need a car and buy a new one? If that has much of a chance of happening, I think you should hold onto the car. Yes, you’ve already sunk a lot of money into this car, but once you’ve paid it off you will OWN it it entirety and your monthly transportation costs will be closer to $500/month. Living in the city, you won’t use it much and can probably get at least 5 to 7 years of life out of the car. To me, a car purchase is an “investment” in your transportation independence for almost a decade and the minimal costs of public transportation versus the independence afforded by owning your vehicle should be thought out carefully.

There are a lot of people telling you to sell your car. I have to wonder, do they currently have a car?

Although I am extremely frugal, the time I personally save driving to work keeps me sane. By driving to work I save a little over an hour a day. Thatâ€™s over 22 hours a month.

My thought and these are just my thoughts, on buying a used car for $2000. I personally would not do it. Cars that are $2000 have a potential for big repairs. There are lots of extremely expensive parts and I am not even talking about the engine. Just to fix A/C can run you another 2k. So 2k for beater car + 2k for a/c + 1K for something else is half the price of what you owe on your current car.

I am also against stretching out the payments at 3% over 5. On 20K over 5 years is probably around $2500. That is an extra 10%.

Without knowing your financial situation. How much all your monthly expenses are, I can not tell you if you should sell or keep it.

If you are only saving $50 after all your expenses. Well, then I think you know what you need to do.

If you are still saving 1K a month then the decision is really up to you. Life is about pleasers. I tell my friends that I can have anything I want. I just can not have everything. Pick and choose what is important to you.

Also try and look to the future. Could you be relocating for any reason? could you need a car then?

In the end *Gulp* it’s only money. :) *Gulp* I even had a hard time typing that :)

I like the suggestion of doing a test run without the car for awhile to see what you think.

If you find that you can’t live without it, I think I’d sell it and get a newer used car instead of a beater. Something like a 98-02 Accord that is likely to still run for years with minimal maintenance costs.

I get where #93 is going with savings, but you will free up the car payment amount each month, and insurance, maintenance and registration costs are likely to be lower too.

I had to respond to the poster that stated that diesel’s get better gas milage but pollute more.
This is absolutely untrue! If you’ve ever driven thorugh Newark or Elizabeth NJ you can see for yourself where all the pollution from processed gasoline gets generated. It only seems cleaner because the pollution occurs in someone else’s town. Just like people who drive electric cars but get their electric from coal fired power plants. Guess what, coal fired power plants – ARE NOT GREEN!
Also, diesel pollution is more particulate matter that settles instead of remaining in the air. It is ABSOLUTELY true that the US carmaker and gasoline lobbies have been blocking the import of more fuel efficient cars from Europe in order to maintain healthy returns for their CEOs, at a cost of all our health. The advertising arm of the corn lobby that insists that E85 is a good plan is what’s continuing to prevent Toyota from bringing in and marketing a diesel Sequoia, which would be WAY better for the environment than a duel/flex fuel version.

Advice for Sarah, you need to rerun the numbers based on your NEW actual circumstances. How often do you take trips to Tahoe, or go to swimming lessons. I would defintely do a trial run of a month, yes your costs will double for that month but if you’re having that much heartache over selling the car it would help you commit to one decision or another.

Does this discussion seem like a rerun to anyone else? I feel like this ask the readers question was posted before…

Wow! Everyone has an opinion on this. I haven’t had a chance to read all the comments. I don’t think zinging her for making a bad initial purchase is productive, she admits there are sunk costs.

I don’t like the idea of a trial period. It makes it too EASY to go back to it!

I like the idea of a purchasing used vehicle. Take time when selling your current car so you get it’s true value, don’t take offers right away. You’re in no real rush to sell.

My experience: We have a newer used paid for SUV. I hated driving DH to work. (No reliable pub trans here. Would take DH an hour commute v. 10 min drive.) We needed another car. Instead of getting in debt for $10,000 I patiently looked around for a real beater. This car is to be used only for occasional trips to grocery, doctor, etc. Found a 1992 vehicle with under 40,000 miles for $1,200 in a parking lot. Has studded tires with rims too! Lesson: BE PATIENT

That weekend car rental sounds like a great idea too. Way cheaper overall than owning. Wouldn’t it feel great to have no car loan and no student loan? You could pay the sl off so much faster.

Are you saying a parking spot in San Francisco costs $300/month or $300/year? I used to pay around $50/month for a spot in Seattle, so I’m hoping you mean per year otherwise that is ridiculous!

Remember when you’re calculating out your cost per month that your situation has changed. You should not be driving 20,000 miles a year now. You should be able to get away with around 4,000 miles if you only use your car to drive to and from work. This will greatly reduce your gas costs, and you can run errands by walking or biking.

You are also paying WAY too much for maintenance. Take the car to a Jiffy Lube for a $19 oil change! That’s all your brand new warrantied car needs. They have been ripping you off on your maintenance charges. You should only need to change your oil once or twice a year at your new mileage level – negligible monthly cost. You could also look into raising your deductible or lowering your liability coverage if it’s really high to lower your insurance costs.

Personally I think you should get rid of the car – put it on Craigslist and sell it yourself rather than taking dealer prices. See how you get by for a month. If it’s no problem, then you’re good. If you’re really missing having your own wheels available go buy a used warrantied car for around $10,000. Consider a Toyota Yaris or something similar – super cheap, small and easy to park, and your payment should be half of what you’re paying now. Coupled with the other savings mentioned above, you should be able to cut that $1014 in half.

The real mistake here, in my opinion, was buying a new car to begin with.

Sell the car. It’s just a car. And you don’t need one in SF. That simple. You’ll feel liberated by not having to think about it and urban parking once the car is gone.

And when/if you do have a car again, DON’T DO SO MUNCH MAINTENANCE!!! I get tune-ups ever 2-3 years, less if I haven’t hit the mileage at which it’s needed (like 75,000 miles on some cars for changing certain belts). I have NO IDEA what someone would do with 4 tune-ups a year.

I would advise you to sell the car, looks like it’s not keeping you at peace. You’ve tasted the convenience of a car but realised the dilemma of lifestyle inflation! Next step is to take action. Rent a car the next trip to Tahoe, it’ll not cost you $1K.

There are a lot of people telling you to sell your car. I have to wonder, do they currently have a car?

=======

I am for NO CAR and I currently own a truck. I used to live car-fee in DC relying on walking, bike, metro, cabs, flexcar (became zipcar) and rentals. My wife is from New Mexico and *had to* have a car (a cultural thing). She soon started accumulating parking tickets in the city and I started gaining weight from lack of walking/biking. Finding parking was always a pain. Traffic was a pain- the DC area has some of the worst traffic in the nation. But she was attached to the wheels, and got a Mini Cooper eventually. Enter new-car insurance payments, plus plus plus. Good city car though.

Later we moved to New Mexico, and we need to have a wheels here because Albuquerque is 100% sprawl and has limited mass transit. We run a business from home and own just one vehicle (a truck). My wife also walks to a part-time job. Traffic is not friendly to bikes so they get limited use, unfortunately.

We had a Mini Cooper but we sold it to buy a used 4×4 truck, because a) repairs on an import are very expensive, b) a mini cooper needs a lot of repairs compared to other german cars, c) we have a business that requires the occasional hauling, and we would rent for that d) we have a cabin in the woods that cannot be accessed without 4×4 during part of the year. e) we drive so little that fuel cost is not an issue.

Sure, we wanted to keep the Mini for 20 years, but it didn’t make sense in our present condition to sustain a money pit with limited usability. We love the truck and maintenance is cheap. We have plans to eventually return to an East Coast city– when we do, we’ll get rid of the truck unless we need it for business and it makes us a profit.

Back in my single days, I moved back into the city (Philadelphia) and gave away my car. My initial reaction was relief. After living about a year without one, I really missed it. I saved for another year and bought a $2500 car. It was perfect.

I don’t think it’s such an obvious decision everyone’s making it out to be. See me through here:

Half of the $1000 is the car payment, which will go away in two years. With her new commute she’s not putting nearly the miles on it, so gas, maintenance, insurance, and bridge tolls are substantially reduced or eliminated. So the only thing making this a bad deal financially is the car note. Pay that off over the next 12 months and you’ll be spending $200-300 driving your car when you want, where you want, and have an (albeit a depreciating) asset to your name. You can still bike to work a couple days a week to save money, that’s what I try to do.

“I used to live in Houston where I could get everywhere on the bus. I owned a car. But I took the bus. The longer commute allowed me to relax and read.”

Where the heck did you live in Houston?! I lived there, and unless you live inside the loop and in very specific area, you cannot get to places like the grocery store on a bus. Yeah, you can commute to downtown with Park & Ride, but that is also only from the suburbs to downtown, not to the Galleria or the Woodlands. You were very lucky!

Sell your car!!! You will have sooooooo much more money, you will be helping the planet, you will be getting to know your community, you will spend time with other people carpooling. I hope you’ve sold it by now. I would love to have no car. Thanks for the great article!

Spending 1/3 of your income on a car you don’t really need is too much. Sell it now and you’ll likely break even or come out a few thousand ahead on the deal. Keep it for 2 more years and you’ll spend $24,000 and finish with a car worth $3000 to $5000 less than it is now. Sell it.

Definitely sell it! And, keep in mind that you can always buy another one if you realized you missed something and really do “need” a car… although the next time you may want to follow the $2000 beater advice….

The thing is, if you have a car, you WILL get in it every day to go somewhere. Availability creates demand, it seems. My husband and I were in a similar situation about a year and a half ago, but we were debating whether we should go back to one car from two. While we could technically afford having two, it was costing us an awful lot of money that we could have done so many more worthy things with. We live about five miles from my husband’s office, he has a motorcycle he rides in good weather (maybe six months of the year in Michigan), and I’m home with the kids for the tiem being. We agonized over it for the better part of the year, sure that we’d regret it if we sold it… and haven’t missed it a bit. Not even once.

Your mileage may vary, obviously – do consider how easily you’ll be able to get to *all* of your regular haunts, not just work – but in SF it sounds like you have a lot of great options that we don’t have here (ZipCar). We’ve rented a car several times when we couldn’t make another solution work, which has been MUCH more reasonable than having a second car on hand all the time just for these few occasions. Interestingly, our total miles driven is much less with one car than it was with two – again, if it’s available, it will be driven.

Have you tried living without a car for a few weeks? Not using for work, grocery shopping, etc? That may be a good practical test.

I’ve lived in Boston for 5 years without a car. Not having a car limits spontaneous road trips (car shares normally cell out for Saturdays and Sundays without advance reservations) and makes grocery shopping marginally more challenging, but it definitely pays off financially.

Let’s keep this simple, sell the car! If you are unsure, park it for a couple weeks and use public transportation. My daughter lives in San Francisco and did not have a car for 7.5 years. She bought a good inexpensive ($10K) used car and uses it on weekends or shopping. Although I didn’t think she needed it, she justified it. She has off street parking and a lot of discretionary income. She uses public transportation to go to work (in San Francisco). Before she had a car, she used City CarShare, where you can rent a car by the hour. Good luck.

I am going to have to go ahead and disagree with the prevailing opinion. I would suggest that you are young, stuff in your life is changing rapidly. You might get a job in a different area and need the car. If it were me, I’d store the car for a year, preferably with my parents (rent free), file it as non-operating, cancel the insurance unless you plan on driving someone else’s car periodically, and just keep making the payments.

I live in Sacramento, and I guarantee that you need a different mechanic — on that Toyota you should not have needed even ONE tuneup for another 20K miles, and you should have only needed 2 oil changes so far. You are getting ripped off, but that is water under the Golden Gate.

And, move to Marin Co and save the bridge toll? Or did they go ahead and finally get rid of it? Poor toll takers will be out of work, oh the horror….the bridge is long since paid for!

6/2008 – moved to Mountain View, CA, current car died, I leased a new 2008 honda civic.

11/2009 – moved to NYC and sold my car. I took a slight loss (with the lease I still “owed” $13k but was only able to sell it for $12k – so $1k loss).

Over the 1.5 years I ended up spending $3700 in car payments ($220/mo) + $2000 down (including registration, etc…), plus the loss when I sold ($1k). Gas was minimal (only put 6k miles on it – so <$1k in gas). I think I got the tires filled once – maintenance total <$100.

Total spent = $7800 or so. Total waste. Should never have bought a car. But I am SO glad I sold it. Good luck!

Sarah,
I have just one word for you: Zipcar (http://www.zipcar.com/sf/find-cars). Our son and his girlfriend just had a baby and keep thinking they should buy a car. Between the pretty good public transit and the excellent Zipcars spread all over the city, there’s just no way to rationalize the expense. I think they could be picked up in a limo everyday and taken wherever they want to go and still not spend as much as they would buying their own. Best of luck to you!

You know, sometimes it’s ok to make your financial decisions with your heart instead of your head. If the freedom of owning a car is worth it to you, keep it.

The good thing is you know it’s not a financially sound decision, and if your emotions ever change you can change your mind. It’s not like you’re in a hurry to make a choice here – you’re not being forced into it right now. Take your time, see how you feel.

I live in Sausalito and commute to the Civic Center for work and it’s beyond doable and MUCH BETTER than driving. As I’m sure you know, the bus is Golden Gate transit or you can take the ferry (slightly more $$). Routes that go through to Sausalito direct during commute hours are the 92, 10, and 2. Other routes may go to Marin City and from there you can grab a transfer down to your work (the 22, or anything going south). A Clipper Card will also give you discount rates for Golden Gate. And many employers have commuter incentives – see if your work participates in commuter checks, which come from your pre-tax income.

Sell the car – take the bus! I’ve been doing it for over a year and it’s a great way to chill out for 30-40min.

Four tune-ups in one year on a BRAND NEW car? That’s just not right, especially on a low maintenance Toyota Matrix, but that’s not your issue. You can’t predict the future and whether or not you’ll be changing jobs again or leaving the city. If you’re sure you will take the savings to pay down your debt and save a little money, then you should do it. If you DO keep the car, take it to a different dealer to be serviced. You’re either getting screwed on the maintenance or you bought a lemon. If you decide to buy a beater, remember – you’re buying someone else’s problems. You don’t know what you’re buying. I don’t mean to sound condescending, but I probably will. I assume by your comment about the tune-ups that you may not know enough about cars to make a wise decision about buying a beater and may get into even MORE hot water. If you decide to buy something cheap with the profits, make sure you get the car fully checked by a TRUSTED mechanic and take a friend who knows about cars with you to help ask questions. You could easily end up spending almost as much as you owe over the next few years if you end up with a used beater mess on your hands. The safe route? Keep the car and drive it into the ground.

I’m in the same boat, and what I did was leave my car on the street for a month, driving it only to move parking spaces. I got groceries on my bike and took the Transbay bus, the ferry and BART into the city. I even visited my parents via Amtrak over Christmas. It gave me a lot of time to consider my decision, decide if I could really go without a car and see how much I was saving in gas alone. You should see the muscles I built by cycling to the ferry landing instead of riding.

Long story short, I’m selling my car tomorrow, getting a ZipCar membership and allowing myself to buy a beater in a few months if the car-free lifestyle is really, truly not working out for me. I recommend doing a trial period as long as your car isn’t going to depreciate much in the meantime. You’ll be able to see what life is like without a car and get into the habit of not using it.

Preamble – I’m a car (and motorbike) person, and I live out in the sticks. Oddly enough, near Tahoe but I digress.

I’m a little on the fence on this, it does seem that it would make financial sense to sell the car and either buy something cheaper (yes, I drive around in a $3k truck I paid cash for). However one problem I can see is – Sarah, what did you use as a source for the current value of the car?

I’m just asking because I noticed that at least out here, KBB private party value is often between 500-1000 over and above what vehicles are being advertised, let alone sold for. So you might not be able to get as much for the car as you hope you would and thus might make the deal a lot less attractive than the current calculation makes it look.

That said, I would seriously consider getting rid of the car, but personally I’d buy something cheaper. Then again, in SF I’d probably tried to make do with a scooter or motorbike.

For the love of God, yes, sell that car! If it’s worth more than you owe, you can use that money to buy a beater for when you really do need to drive somewhere and use transit the rest of the time.

We leased a car just over 4 years ago and regret it to this day! When the lease came up a couple of months ago, we did not buy it out as we now have 3 children instead of the 2 we were planning. My parents had a beater that they gave us and we are now car payment free. I call the “new” car our “little engine that could.” We are now funneling our “car payment” onto eliminating our credit cards and when we’re debt free we’ll buy ourselves a used minivan that fits our budget. Hopefully with cash and no payment. Plus…we’ll be debt free.

Sarah, your expenses seem high… My wife and I share a car and our operating costs have run between $3000 and $4000 a YEAR (for roughly 15,000 miles). Admittedly we rarely need to pay for tolls or parking, items that buff your bill substantially.

The biggest portion of your cost structure, the loan payments, isn’t exactly an expense. A car can typically be driven for 120,000 to 150,000 miles, so the $17,000 you spent ought to be amortized over the useful lifetime of the vehicle. Even if you continue to drive 20,000 miles a year, which seems excessive given your new location, the amortized cost is around $3,000/year.

Thus I would suggest you consider the possibility of keeping the car and driving less. Your cash flow over the next two years will be high, but your true expense of ownership will likely end up under $500/month. If the car is worth that to you, then go ahead and keep it.

Your initial mistake was in taking a large loan to buy a new car rather than buying a cheaper used vehicle. Even when you really need a car, new cars are a luxury.

But now? I cannot know from what you have written what your lifestyle would be like without a car. In the suburbs, living without a car can be very limiting. In the city, much easier to do without. Is the car adding $500/month of value to your life?

Personally, I vote for parking the car somewhere safe (parent’s house?)and leaving it for occasional use, but going ahead and paying it off and keeping it for a long, long time. It will be extremely economical transportation, and while sunk costs are gone, they are also something that, as one person said, are essentially prepaying transportation costs for the future.

Me and my partner were in a similar situation: we bought our car new for about 15k (euro) and had it for a year when my partner got a new job which got, as a perk, a first class dutch public transport card. As a spouse I could get the same card for under 1000 euro per year.
We decided to sell our car, even though we could only get 8k for it after one and a half year, which was about the amount we still owed on it. Tough luck, but it didn’t cost us any more money.

Fast forward almost two years to today. We’ve been car-free and it has saved us an incredible amount of money. As a result we’ve paid off a reasonable sum on our mortgage and had a number of luxury holidays. We have had three occasions in two years where a car would be handy, and in those situations we could either borrow one or hire one. Apart from that, we have never looked back.

Another upside is that we now cycle much more and have a more healthy lifestyle. I sincerely wish everyone, who is in a situation where they could live without a car, to do so.

I think the best option for you is to sell your current car, pay the debt (or what you can of it) and buy a cheap car. My current car cost me about $1k. It gets better gas mileage than yours and it hasn’t had any issues. I’ve been driving the thing for about four years now.

Also, you need a new place to get services. I pay $25 for service and inspection in the Bay Area.

I understand your reasons for wanting to get rid of the car– I personally got rid of my car about a year ago, moved to a city with great public transportation, and couldn’t be happier. Doubling your commute is no biggie, I can tell you that I’d take 40 minutes of reading, listening to my iPod, and zoning out over 20 minutes of driving any day.

What makes me hesitate is that it seems like you’ve moved and changed jobs a lot recently, and I wonder how certain you really are that you will not need a car in the future? From your description, it also sounds like you use it quite a bit outside of just getting to work. It is a lot easier to have a car at your disposal than to be standing in line and filling out paperwork every time you need a rental.

Why don’t you try not using the car at all for a week or so and see how it goes? I think you may be getting more use out of it than you think. If you really want to get rid of it, a good option that others have said on here is to sell it and then get an old beater if you decide you really need a set of wheels. You would still be paying for gas and insurance, but at least you could save on car payments.

In the summer of 2009 my daughter and son-in-law decided to move to Arizona. They knew they would have to have a car due to some chronic health conditions.
At that point I realized the main reason I kept a car was so that they could use it. So I just gave it to them (with the strong suggestion that they remember this when they are picking out my nursing home).
I live in Seattle, which has OK public transit. Most of the things I need — library, markets, bank, drugstore, post office — are within 1.3 miles of my apartment. There are buses for the other things.
My life is a lot less complicated without a car. It was paid off, but I had to factor insurance, gas, oil changes and repairs into my budget. I no longer worry where it’s parked, whether it needs a tune-up, if the tires need replacing or that someone will steal it or somehow damage it and keep going.
I like being car-free. Your mileage may vary, as it were, but it sounds as though you already know the answer to the question you have posed.

No-one seems to have considered you might just love driving? I live in London, England, which has fantastic public transport links – however I LOVE driving & love my car. I’ve never bought a new car & always pay cash. My current car is an 11 yr old Mercedes, cost under $2K (2 yrs ago) – drives like a dream, has not needed any repairs the 2 yrs I’ve owned it and only needs servicing once a year. I really don’t know whether you should sell/keep/go car-free/buy an older car, but please do what works best for YOU. :)

Forget that youâ€™re a practical, logical, pragmatic person. If youâ€™re having that hard a time selling your car, you should keep it. â€œAnd yet I get in and drive it every single day â€” to teach swim lesson after work, to dinner parties, to events, on trips to Tahoe, on excursions.â€ You are obviously getting a lot of use and enjoyment out of it. How much additional time is it going to take you to find and use alternative modes of transportation for all your non-work activities? Will you even be able to do everything that you want without a car? Enjoy your extracurricular activitiesâ€¦enjoy your car!

Hereâ€™s why I think you should keep the carâ€¦

â€¢ Good deal on the car ($3500 off Blue Book)
â€¢ Great financing (0% interest)
â€¢ Gas should go down considerably based on the 40 mile commute vs. 8 miles
â€¢ Sounds like youâ€™re overpaying for maintenance or over-maintaining. This might even go down since youâ€™re now putting less miles on your car.
â€¢ Insurance could be lower and you might even get a discount for driving 10,000 or less miles/year. This should also go down as the value of your car goes down and once the car is paid for, you could even go the liability-only route.
â€¢ No more bridge tolls.
â€¢ Free and easy parking at work. How much you pay for downtown parking depends on how often you go out.
â€¢ You forgot one other additional cost to car ownershipâ€¦registration feesâ€¦but those should also go down as your car ages.
â€¢ â€œA car is a depreciating asset, and will not add any value over time.â€ Sure it does. Itâ€™s value is that once paid for, you will continue to get use and enjoyment out of it for many more years.
â€¢ I used to take the bus to work, when I worked downtown, but was so thankful I had my car for those occasions when I didnâ€™t want to be standing in the pouring rain waiting for a bus or I just got a late start and missed the bus and didnâ€™t have time to wait another hour for the next one.

I am in the get rid of the car camp, especially since you have some car share options around. I have lived car free as a single person in a big city (with a much harsher climate BTW) and once in a while it was hassle(the dinner party senario can be a bit complicated, but usually I just asked the host who else they have invited and would hit a friend that was also going up for a ride. I also hadroommates with cars and very occassionally would ask them for rides. We all got along and did little favors for each other. Do you buses have bike racks? I would take the bus too work and ride the bus home then you have your workout in too.

We (DH and I)are thinking of downsizing to just a single car. The hang up in our situation is that one car could do the job of both our cars, but that would mean getting rid of both cars and purchasing a third car. So far inertia and the fact that both cars run great have kept that from happening.

If you plan to stay where you are for a few years, and you can get by without the car, and getting rid of the car will free up $750/month or so after the costs of public transportation, sell the car and put that extra money toward your student loans. That’s a lot of debt to be carrying, so anything you can whittle away will help you in the long run.

I have a Hyundai Accent that I bought new for 12k, now paid off. It’s was basically the cheapest car on the road at the time. It does suck sometimes when a nice car pulls up to me at a red light, but then I just think about the monthly payments they have to make on that really nice car.

The point is that I can afford a new car but instead of getting one I pretend like I have a payment of $279 but put it towards stock every month. My car gets me from point A to point B, and the monthly payments (investments) are really starting to add up!

I have lived with and without a car while living in a big city, and I must say that owning a car is NOT worth the money and the hassle!

As you already know, parking sucks, down-town driving is stressful, and it is just plain expensive.

Not owning a car forces you to be creative and take advantage of more things that are walkable in your neighborhood. I’ve found that I actually learn a lot more about my neighborhood/city when I don’t have the option to drive.

I doubt you’ll regret selling the car, but if you do you can always buy another. Make sure to start a sinking-fund for car replacement!! You never know when you’ll have to move and need a car, so a car-replacement fund is absolutely key to living car-free!

I just sold my car! It took me 6 months to gather the courage, and 2 days to sell it. I had no car payment, but I still figure it cost me $200 per month. Plus I can rent out my parking space now. I figure that with zipcar, cabs and car rentals as needed, I’ll still save lots of cash.

1. figure out what you like to do with your free time – do you like to take trips or just do “city stuff”

if you like to take trips, then keep your car or get a cheaper one

you will be extremely SAD if you are stuck at home every day off and every eve after work

the only reason to buy a new car is to keep it until you run it into the ground – then get your enging rebuilt and keep driving it

for me, I am selling my SUV cuz I can’t take trips in it cuz of high gas prices, so I am going to get that beater

if you are a car person and you know you are a car person, keep some kind of a car

don’t listen to the car haters – they suck and they are not real people – they are losers who live only to work and they are depressed all the time and are constantly on suicide watch from never leaving the city

a normal person needs to get out and see nature – don’t listen to the bussy/biky nerds

Should I sell my car? Depends on your life style.. I have not needed a car in my daily life for over twelve years. I have found through good friends and family no need to own a car full time. My savings has grown by 78% and I use two methods – (i.)Rent a car -Entrpz has a weekend program during the winter months $9.00 a day…I network with all my neighbors we do doctor and dentist visits on Fridays and Shop Sat and Sunday – I use Occasional Car/Zip Car in certain markets for my one day need to roll around..I like the last time I rented it was my turn to fill it up the gas $40 bucks was on them. I have yet to spen $50 bucks on tranpertation. The rest of the time I walk and ride the bus.

It depends how desperate you are and how much value the car holds. If you want to max out value, put some money in to the car and post it every where you can, for example Craigslist, and other local free classifieds. If you are looking instead to get it off your hands as quick as you can I would tr fastcashforjunkcars. They would give you cash for it within 24 hours. Good luck, thanx for the calculations.

Sarah, good questions and important decision. But as others have pointed out:
(1) “Sunk Costs” are different than ongoing expenses in financial decision-making
Second I will add that:
(2) Making timely car payments add to your credit score.
(3) Have you thought of the quality of life benefit of owning your own automobile?
(4) San Francisco is America’s most expensive city.
Let’s now solve your problem, which seems to be your total monthly payment. Lower your payment by joining a credit union and refinancing the balance of the debt at 1.9% interest (the going rate for a good credit holder, which I expect you are because you got 0% on your original loan) for a **LONGER LOAN**. Yes you will incur ~$1k finance payments that’s still economically to the good.
If you still can’t afford your car then sell it and take the bus or move out of San Francisco.

Lots of research and more is required. Not all cars are the same. The biggest expense of a car is the fuel and depreciation. So what vehicle have very good consumption and have you checked those book prices to see how well each vehicle holds its value?

Once you have doe all this re do your finance before making your final decision. I have to b honest it is a car all the way for me.

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